Liquified Natural Gas Imports - Are They Worth the Risk?

Abstract

Society of Petroleum Engineers 6200 North Central Expressway Dallas, Texas 75206 THIS PAPER IS SUBJECT TO CORRECTION American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc. Abstract The decline in readily available supplies of gas to interstate pipelines is expected to continue for the foreseeable future. Uncertainties and delays associated with natural gas legislation and other supplementary gas supplies, such as Alaskan gas and coal gasification require that the gas industry import liquefied natural gas (LNG) to satisfy gas requirements. There are risks, however, associated with LNG imports which must be recognized and dealt with to lessen United States dependency on imported sources of energy. The Energy Resources Council, recognizing the risks associated with LNG imports, has implemented a LNG import policy which set a national level of about 2.0 Trillion cubic feet (Tcf) of LNG by 1985, but more importantly, it limits imports from any one particular source to 0.8 Billion cubic feet (Bcf) to 1 Tcf per year. Introduction The Presidential energy message of February 26, 1976, expressed serious concern about the United States' growing dependence on imported sources of energy. It went on to state that: "We must reduce our vulnerability to the economic disruption which a few foreign countries can cause by cutting our energy supplies or by arbitrarily raising prices." Turning to natural gas, the Presidential message recognized the impact of a continued gas shortage and the need to supplement declining domestic supplies with such supplementary sources as LNG imports. The prospects for increased levels of imports were real in light of several LNG projects authorized or planned for the future. The policy announced in February considered 1 Tcf as an acceptable level of LNG imports by 1985, subject to further analysis and review. The Energy Resources Council (ERC), which is part of the Executive Office of the President, part of the Executive Office of the President, has responsibility for communicating and coordinating the activities of Federal agencies that have responsibility for developing and implementing energy policy or managing energy resources. The ERC was directed to implement a new policy for imported LNG, including review of each LNG project for national security and economic feasibility. The ERC was also directed to establish procedures for the review of such issues as pricing, government financial assistance, regional dependence, sources of supply, and reassessment of the 1 Tcf import level. The ERC set up a Task Force to conduct such further review. Based on the findings of the Task Force, the ERC recommended certain actions as a further step in implementing a LNG policy. policy.